Oregon leaders to vote on scrapping health insurance exchange

Alex Pettit

Don Ryan / Associated Press

Oregon officials will vote Friday on whether to scrap their troubled state healthcare enrollment exchange and use the federal system instead. Above, Alex Pettit addresses an advisory committee meeting.

DURHAM, Ore. — Oregon officials will vote Friday on whether to become the first state to scrap its troubled insurance exchange and switch to the federal system, after spending an estimated $248 million on an ambitious exchange that failed in spectacular fashion.

Not a single insurance seeker was able to enroll online in a private plan under the Affordable Care Act in this high-tech state, which has long prided itself on healthcare innovation and whose governor is a former emergency room doctor. Cover Oregon instead was forced to resort to paper applications.

The state has dismissed Oracle, its main technology vendor, and Democratic Gov. John Kitzhaber has asked the state's attorney general to investigate its legal options.

At a Thursday meeting, Cover Oregon's technology advisory committee recommended that the agency scrap its local exchange because there is neither the time nor the money to fix it.

"I think their recommendation to use the federal website technology is the right call," Kitzhaber said in a statement afterward. "It is the most reliable and least costly way to ensure that we have a working website for the next enrollment period" this fall.

Federal officials have worked closely with Oregon throughout the debacle, allowing the state extra time to enroll consumers, and a spokeswoman with the Centers for Medicare & Medicaid Services said in an email that it stood ready to assist Oregon once a final decision was made.

If the board accepts the recommendation, "we won't use the technology for the local exchange," said Clyde Hamstreet, Cover Oregon's interim executive director. "We'll try to salvage the technology for the Medicaid work we have to do. We'll be using federal technology for the applicants who want to buy insurance through Obamacare."

James D. Moore, a professor of political science at Pacific University who has followed the Obamacare rollout, said Oregon was probably the biggest failure of the 14 states that chose to run their own insurance exchanges.

"Oregon, especially with the current governor, has prided itself on being a trailblazer in lots of healthcare things," Moore said. "This says, 'Not only can we not do it, but we were an abject failure at it in this particular round.' It's going to damage Oregon's national reputation. It may have an impact on Kitzhaber's reelection campaign."

Performance in the independent state exchanges was uneven, but a number of the states that built their own did extraordinarily well in enrolling consumers in private plans, including California, New York, Connecticut and Washington state.

When President Obama's healthcare law was in the planning phases, Oregon was expected to lead the way in expanding coverage. Kitzhaber made the program a priority, and the state was already viewed as a national model by demanding better coordination among healthcare providers to improve the care of Medicaid patients.

Oregon received one of the federal government's early innovator grants and ultimately got nearly $315 million in federal funding to develop a system that could help enroll the state's estimated 560,000 uninsured people, about 15% of its population.

Although CoverOregon.com failed miserably, the state made big strides under the provision of the Affordable Care Act that expanded Medicaid, enrolling some 172,426 Oregonians in the shared state-federal program. The state enrolled another 130,000 through a fast-track program that contacted residents who were receiving state and federal assistance through other programs.

But the website where Oregonians were supposed to enroll in private plans, built by Cover Oregon's main contractor, Oracle, was a disaster from the start.

After discovering a series of technical problems the weekend before the Oct. 1 launch — including inaccurate calculations of the tax subsidies that consumers would be eligible for — Cover Oregon decided to scratch its plans to go live with the rest of the country and never managed to get online enrollment started.

The state turned instead to paper applications, bringing on some 400 workers — some from other state agencies — to help process each one. As of this week, about 70,192 individuals have selected private plans through Oregon's marketplace, according to a spokeswoman for Covered Oregon.

Oracle spokeswoman Deborah Hellinger said in a statement Thursday that the firm "looks forward to providing any assistance the state needs in moving parts of Oregon's healthcare exchange to the federal system if it ultimately decides to do so."

One option considered in the last month was to fix the state's existing technology using a new vendor. But an outside analysis revealed that such action would take too much time and cost an estimated $78 million, which the state cannot afford, Alex Pettit, the state's new chief information officer, said Thursday.

"We have a very aggressive timeline, which introduces substantial risk into the project plan and little to no margin of error," Pettit told the technology advisory board. "Anything that went wrong on that thing as we were going would again result in the fact that we would not have a functional system on Nov. 15."

National Republicans seized on the news that Cover Oregon could move to the federal exchange and sought to place the blame on Kitzhaber and Democratic Sen. Jeff Merkley, who are both up for reelection this year.

"Cover Oregon wasted over $200 million and is the poster child for what's wrong with Obamacare's state exchanges," Republican National Committee Chairman Reince Priebus said in a statement. "While we may be saying goodbye to this failed state healthcare exchange, it will not be lost on anyone that John Kitzhaber and Jeff Merkley were the individuals responsible for giving Oregonians Cover Oregon."